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Insurance Executive Brief: Fall 2015

Customer Integration Risk: A High Stakes Proposition for Insurance Mergers and Acquisitions

Insurance

March 3, 2016

Optimal customer integration is critical to achieving projected deal value. Yet effective customer integration remains elusive in many transactions. In this client guidance article, we focus on how to adequately plan for, and optimize customer integration pre- and post-transaction, and how to leverage customer data as an asset to increase stakeholder value.

Background
To date, 2015 has seen a flurry of M&A activity in the insurance and reinsurance markets. While the number of transactions is not atypical when compared to the past few years, the size of the transactions, measured by total deal value, is noteworthy. In 2014, five transactions were announced that exceeded $1B in deal value, with the largest at approximately $5.6B - Dai-ichi Life purchase of Protective Life. In 2015, seven transactions were announced that exceeded $1B in deal value, with two transactions exceeding $25B - ACE/Chubb and Aetna/Humana. Such deals involve a variety of business strategies, and involve a variety of risks, with customer integration being among the top concerns due to the complexity of getting it right.